The sad case of leaving minerals in the ground

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Mining executives say the extractive sector faces an uphill task to raise funding to retool.

Zimbabwe is now a fully fledged resource cursed country where abundance of natural resources is not contributing to economic growth but rather to recession, depressed liquidity, human rights abuses and unmitigated land and water pollution.

THE ZIMBABWE ECONOMICS SOCIETY COLUMN
Farai Maguwu

Fresh from the farm invasions of the early 2000s, Zimbabwe shifted to extractivism not by design, but rather in response to China’s construction boom which heavily relied on raw materials from Africa, of which Zimbabwe became a major source.

The discovery of Marange diamonds in 2006 and the subsequent entry of obnoxious companies with strong links to the military in 2009 sealed the fate of Zimbabwe as a resource cursed company.

Once the military tasted the quick returns of diamonds, they spread their tentacles to every extractable mineral and began negotiating several mineral deals with Asian syndicates who bring the much-needed capital to open new mines and further develop existing ones.

Since 2006 Zimbabwe has experienced increasing militarisation and securitisation of the mineral sector leading to a rise in labour abuses and gross human rights abuses of communities surrounding mines.

The military take-over of Marange diamonds fields in November 2009 was followed by unmatched plunder of a resource which, if it was managed properly, could have changed the fortunes of Zimbabwe forever.

State-aided smuggling, transfer mispricing and diversion of diamond proceeds from Treasury became the trademark of Marange diamonds. Violence against artisanal miners and the wider Marange community also left the locals heavily traumatised by the discovery, once touted as the world’s biggest diamond find in a century.

Ironically, the economy of Zimbabwe has continued to slide despite the Marange find whilst the top generals and the ruling elites have become wealthier.

As production has hit an all-time low at Marange amid indications the resource is now depleted, ruling party and military elites have turned to other minerals such as gold and chrome.

One such company is the Zimbabwe Consolidated Diamond Company (ZCDC) which was illegally registered as a private company in violation of the law which requires it to be registered through an Act of parliament.

ZCDC, despite having been formed to consolidated the diamond mining firms in Marange, is already trying gold mining projects along the Gache-Gache area in Kariba and has issued eviction warnings to the residents of Tsvingwe in Penhalonga where it claims there are indications of kimberlitic diamonds. Geologists suspect the company wants to mine gold as the region is well known for its rich gold deposits.

Against this aggressive pro-extractivist approach in the absence of a robust people-centred mining policy, Zimbabwe risks sliding further into deep economic crises as mining will divert government attention from alternative and more sustainable economic sectors such as agriculture.

The mining sector, now fronted by the military and Zanu PF officials, is not linked to the rest of the economy.

The current liquidity crisis in the banking sector is itself an indictment of the mining sector as government continues to boast of a rise in mineral exports despite a drop in commodity prices.

The entry of indigenous players, especially Zanu PF and military officials in the mining sector has seen a rise in labour violations in the sector as these use their political and military muscle to silence the workers.

This bullying of workers has extended to foreign-owned companies such as New Dawn’s Turk Mine where protesting mine workers’ wives and their husbands employed at the mine were last week teargassed by the police as they demanded their salaries. The workers have gone for three months without pay.

It is the same for other big mining corporations such as Hwange Colliery where workers had gone for 3 years without pay, resulting in the company “giving workers bricks to sell to raise salaries”.

This means mine workers are only helping company shareholders to make money whilst they are sitting in their offices in Europe.

The same mining companies have captured the state through manipulating ruling elites who unleash the might of the state against workers who dare to demand what is rightly theirs.

Thus the quality of jobs created by the mining sector are tantamount to modern-day slavery and are keeping workers in the vicious cycle of poverty.

The boom-bust cycles in the mining sector also prove that mining is an unreliable source of employment as exemplified by the placing of several mines under care and maintenance during the 2007-2008 financial crisis.

Workers were sacrificed first as the crisis loomed.

To get out of this poverty trap, Zimbabwe needs an alternative development model that creates sustainable jobs and wealth for the workers. The new model of development needs to prioritise the creation of economic opportunities for women as well.

Agriculture is a critical starting point for many reasons. Most rural women have always been into subsistence farming and have only slowed down due to the combined effects of climate change and government’s prioritisation of mining over agriculture. Government should subsidise farm inputs such as seeds and fertiliser to ensure these are readily accessible to rural farmers.

Agriculture has backward and forward linkages which will boost the manufacturing industry and increase Zimbabwe’s net exports.

It is only through investment in agriculture that rural Zimbabweans will be able to save and thereby increase liquidity in the banking sector.

Zimbabwe needs to invest more in renewable energy, particularly solar. This is a highly sunny country, receiving at least 2 000 kWh/(m² year).

However, the country has remained fixed on non-renewable dirty energy such as coal which is universally blamed for high carbon emissions that increase global warming. Solar energy ensures electricity reaches remote parts of the country faster, thereby contributing to rapid rural economic development.

Government policies should aim at making solar technology cheaper and accessible to rural folk. Awareness campaigns are also required for the people to appreciate both the economic and environmental value of solar energy.

This will also improve the growth of the information communication technology sector beyond urban areas.

However, the main impediment to the attainment of the above is the rentier economy which rewards laziness and corruption. Agriculture and solar energy require real investments and careful planning which are impossible if implemented under a predatory elite.

Maguwu is director of the Zimbabwe Centre for Natural Resource Governance. New Perspectives articles are co-ordinated by Lovemore Kadenge, president of the Zimbabwe Economics Society (ZES). E-mail kadenge.zes@gmail.com and cell +263 772 382 852.

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